Policy and Politics

Main Menu

How to tell the truth with graphs and statistics (but still make your own decisions)

Jared Berstein points to a graph produced by the left-leaning Center on Budget Policy Priorieties (CBPP) which I think provides a good foil for my earlier post.

Now the CBPP, like most ideologically oriented think tanks, does have it’s preferred policy priorities. But such a thing is not implicitly stated in the above graph, which is fairly straight forward. As Bernstein points out:

There are at least two notable points to take from such a comparison. First, the rates of poverty that result from market outcomes are not as different across countries as you might have thought. Many people, for example, tend to think of Scandinavian economies as generating a lot less poverty than the US, but looking across Denmark, Sweden, and Norway, the rates of market-driven poverty are all pretty close to that of the US—around 25%.

France and Germany have considerably worse market outcomes than we do over here.

The differences in international poverty rates don’t really show up until we factor in the impact of taxes and transfers on market outcomes. Here the US is clear laggard. The second figure shows the percent of market poverty reduced by taxes and transfers. Our system provides the least amount of poverty reduction (35%), about half the average across the countries in the figure (avg without US: 66%).

These are facts, much like the Heritage graph, but they’re not wildly unrelated to present a misleading picture. They are what they are, and while obviously Bernstein thinks such a situation is inherently bad, one could easily walk away thinking this information was a good thing – see, we’re not so much like them socialist-commie countries!

Of course, there are downsides to having comparatively low after-tax redistribution and transfers in this country. Namely, it means less of our resources are being positioned to combat comparatively poor upward intergenerational income mobility within the bottom 20%: